Placing

Zoo Digital Group PLC
25 May 2005

                             ZOO DIGITAL GROUP plc
                        ('ZOO Digital' or 'the Company')

 Placing of New Ordinary Shares to raise £3.162 million at a price of 8.5p per
                     share with New and Existing Investors

                    Notice of Extraordinary General Meeting

                    Update on Current Trading and Prospects

ZOO Digital Group plc announces today that it is seeking to raise £3.162 million
before expenses through a conditional placing with new and existing investors of
37.2 million New Ordinary Shares of 0.2p each at an issue price of 8.5p per
share to provide additional funds to further enhance the development of its
business.

Funds raised will be used to:

•          Support a faster acceleration and exploitation of the DVD-EXTRA
           technology
•          Assist the expansion of the business into Japan via  collaboration
•          Assist in the expansion of the office in the USA to support an
           increase in activity
•          Complete the access control and anti-piracy software, and the full
           linear authoring software
•          Further invest in patent protection and filing of additional patents.

ZOO Digital also provides an update on current trading and prospects, full
details of which are contained in the circular ('the Circular') which is
expected to be sent to shareholders today.  Key points include:

ZOOtech Limited ('ZOOtech'):

  • Turnover for the financial period ended 31st March 2005 is estimated to be
    in line with market expectations at £0.5 million and the division continues
    to make excellent progress in the development and licensing of core
    products.
  • ZOOtech continues to work closely with Hollywood studios in the area of
    process improvement and cost reduction and has a number of ongoing
    initiatives.  Implementation of our 'Menu Regionalisation' tool involves
    re-engineering of established processes but achieves significant time and
    cost savings as a result.
  • Documentation of the new processes is now underway and the financial
    framework has been agreed in outline with one major studio.  The Directors
    expect use of the software to commence during summer 2005 and that turnover
    will be in the order of $1 million for the current financial year.

ZOO Digital Publishing Limited ('ZDP'):

  • Turnover for ZDP for the financial period ended 31st March 2005 is
    estimated to be in line with market expectations at approximately £11.0
    million.
  • ZDP continues to focus on two key areas of activity; interactive DVD Games
    and Games Publishing.  Both areas have progressed significantly over the
    past year and are anticipated to grow further.

Attached to this announcement are extracts from the Circular, which sets out the
background to the proposals and further details on them.  Copies of the
Circular, including the Notice of EGM, are expected to be posted to shareholders
today and are available from the Company's Nominated Adviser and Broker, Noble &
Company Limited, 76 George Street, Edinburgh, EH2 3BU, free of charge, for a
period of one month.

Ian Stewart, chief executive officer of ZOO Digital, commented:

'This fund raising enables the Company to take the business to the next
important stage in its development.  The appetite for Interactive-DVDs, and in
particular ZOO's technology, is proven and the Interactive DVD market is growing
rapidly. We are focusing our activities on sectors and regions where the highest
growth is likely.  Funds raised will be used to accelerate our technology's
penetration in order to ensure we develop our position as the world's leader in
production tools for the current and future DVD formats. We are pleased with the
support from existing and new shareholders with an oversubscribed fundraising in
quite clearly a difficult market.'

For further information, please contact:

Ian Stewart                       Robert Deri
CEO, ZOO Digital Group plc        Chief Financial Officer, ZOO Digital Group plc
0114 241 3700                     0114 241 3700

John Llewellyn-Lloyd              James Chandler/Helen Thomas
Noble & Company Limited           Weber Shandwick Square Mile
020 7763 2200                     020 7067 0747



The following text is an extract from the Circular that is expected to be
dispatched to shareholders today.

Introduction

The Company has today announced proposals for a capital raising to provide the
Company with additional funds to further enhance the development of its
business.  The Company is seeking to raise £3.162 million before expenses as set
out herein.  This is to be effected by means of a placing (the 'Placing') of
37,200,000 new ordinary shares of 0.2p each in the capital of the Company ('New
Ordinary Shares') at an issue price of 8.5p per New Ordinary Share (the 'Placing
Price'), which have been conditionally placed by Noble with certain new and
existing investors.

Due to the size of the Placing relative to the Company's existing authority to
allot shares for cash otherwise than on a pre-emptive basis, the Placing is
conditional upon the passing of  a resolution ('Placing Resolution') by the
Company's shareholders at an extraordinary general meeting ('EGM') to authorise
the allotment of the New Ordinary Shares and to approve the disapplication of
pre-emption rights to enable the Directors to allot the New Ordinary Shares for
cash to persons other than current shareholders in the Company.  The Placing is
also conditional on admission ('Admission') of the New Ordinary Shares to
trading on the Alternative Investment Market ('AIM'), a market operated by the
London Stock Exchange plc (the 'London Stock Exchange').  Application will be
made to the London Stock Exchange for the New Ordinary Shares to be admitted to
trading on AIM.  It is expected that, following the passing of resolutions at
the EGM, dealings in the New Ordinary Shares will commence on or around 23 June
2005.  The New Ordinary Shares will rank pari passu with the existing ordinary
shares of the Company.

Notice of the EGM which is to be held at 11.00am on 21 June 2005 at the
Company's offices at 20 Furnival Street, Sheffield, S1 4QT, at which, inter
alia, the Placing Resolution will be proposed, is set out at the end of this
document.

The Placing and use of proceeds

The Directors believe that there is an opportunity to raise funds from a small
number of institutional and other investors at the present time.  Your Board has
therefore decided to effect the fundraising by way of the Placing following a
limited and targeted marketing exercise, rather than by offering all
shareholders the opportunity to acquire further shares.  The Directors believe
that the additional cost and delay incurred in the production of a prospectus in
connection with any such offer would not have been in the best interests of the
Company.

The net proceeds of the Placing are estimated at £3.0 million and this money
will be used:

•          to support a faster acceleration and exploitation of the DVD-EXTRA
           technology;
•          to assist the expansion of the business into Japan via collaboration;
•          to assist in the expansion of the office in the USA to support an
           increase in activity;
•          to complete the access control and anti-piracy software, and the full
           linear authoring software; and
•          to further invest in patent protection and filing of additional
           patents.

Current trading and results

The Company is currently completing its formal audit and the results for the
financial period for the 15 months to 31st March 2005 are expected to be
released on or around 28th June 2005. The Company provides the following update:

1.       ZOOtech Limited ('ZOOtech')

  • Turnover for the financial period ended 31st March 2005 is estimated to be
    in line with market expectations at £0.5 million and the division continues
    to make excellent progress in the development and licensing of core
    products.

  • The latest edition of the flagship product, DVD-EXTRA STUDIO 1.6, was
    released to plan in April following around seven person years of product
    engineering work, and is a significant development introducing new linear
    authoring features.

  • An expanding number of third party companies are using DVD-EXTRA STUDIO to
    produce interactive DVD titles in a number of market segments that include:

(i)                Entertainment, Multimedia and Music;
(ii)               Corporate & Marketing;
(iii)              Education & Early Learning; and
(iv)               Process Improvement in DVD Production.

•          ZOOtech continues to work closely with Hollywood studios in the area
of process improvement and cost reduction and has a number of ongoing
initiatives.  Implementation of our 'Menu Regionalisation' tool involves
re-engineering of established processes but achieves significant time and cost
savings as a result.

•   Documentation of the new processes is now underway and the financial
    framework has been agreed in outline with one major studio.  The Directors
    expect use of the software to commence during summer 2005 and that turnover 
    will be in the order of $1 million for the current financial year.

•   In addition to 'Menu Regionalisation', work on the compatibility testing of 
    special features is progressing on plan.

•   The Directors expect that DVD-EXTRA STUDIO will be used to develop
    approximately 150 DVD titles to be released into the market by the end of 
    the current financial year across Europe and North America.

•   These include:

        (i)         bEqual's 'Madagascar Animal Trivia DVD' which is being
                    released as a companion to the DreamWorks movie, Madagascar 
                    and was made by Comchoice in the US;

       (ii)         The Snap TV Games titles 'NCAA Football Challenge' and '
                    Trivideo: 20th Century', which comes with hours of footage 
                    and related trivia questions;

      (iii)         A number of educationally based interactive DVD Titles
                    being released by National Geographic into North America; 
                    and

       (iv)         A number of titles, including an education title in North
                    America, from Oasis DVD who are planning to use DVD-EXTRA  
                    STUDIO.

•   Additionally, OUAT Entertainment in France is expected to produce at
    least five new interactive DVDs, Smoking Gun Entertainment Group plc is
    developing and publishing a number of interactive DVD Football Trivia Games 
    and Two Way TV is scheduled to use DVD-EXTRA STUDIO to develop at least two
    interactive DVD titles this financial year.  Contender Entertainment Group 
    is publishing a 'Test The Nation' DVD Game based on the successful TV 
    programme and Somethin' Else is continuing to develop a number of 
    interactive DVD Games for multiple territory publication following the 
    success of 'Beat The Intro' last year.

•   The Directors believe that the 'interactive DVD' genre is becoming
    more strongly established and recognised as a category in its own right with
    strong support from leading publishers including Universal Video, VCI and
    Contender.

•   DVD-EXTRA STUDIO is being used increasingly for the development of
    interactive value-added bonus features on mainstream DVD titles, such as the
    adventure game included on Garfield - The Movie from Fox Home Entertainment 
    and ZOOtech is seeing and helping to evaluate a growing number of 
    interesting propositions.  With the introduction of version 1.6 of the 
    software offering linear features in addition, the Director expect to see an 
    increasing take up and usage of the software in this sector.

•   Version 1.6 of DVD-EXTRA STUDIO introduces a fusion of traditional
    DVD authoring functionality with ZOOtech's innovative interactive 
    development capability.  This offers DVD title developers the opportunity to 
    undertake a project entirely within DVD-EXTRA STUDIO, offering further 
    savings of time and cost.  In addition, the new functionality makes possible 
    interactive DVD features not previously achievable, providing studios with 
    the opportunity to deliver significant added value to their titles.  We are 
    working closely with two studios to offer engaging new features on 
    forthcoming titles.

•   In the corporate sector, following the success of the interactive
    marketing DVD produced for Land Rover, there are a number of further 
    interactive DVD products being produced and the Directors expect a number of 
    products to be in the market during 2005.

2.  ZOO Digital Publishing Limited ('ZDP')

•   Turnover for ZDP for the financial period ended 31st March 2005 is
    estimated to be in line with market expectations at approximately 
    £11.0 million.

•   ZDP continues to focus on two key areas of activity; interactive DVD
    Games and Games Publishing.  Both areas have progressed significantly over 
    the past year and are anticipated to grow further.

•   ZDP is scheduled to increase the output of titles on interactive DVDs
    across Europe and Australia.  Universal Pictures is extending its range of
    titles and negotiations are continuing with US parties for the development 
    and publishing of standalone interactive DVD Games into North America.

•   In Games Publishing, the Directors believe that the pipeline of
    products is the strongest it has ever been and the release schedule for the
    first half includes Alien Hominid and Rapala Pro Fishing on PS2 and Xbox,,
    Powerdrome on PC and Smashing Drive, Pacman World 2 and Big Mutha Truckers 
    on GBA.

•   The development project for Konami 'Crimelife' is progressing on
    schedule for expected release in September 2005.  Konami are intending to
    publish the title in Europe and North America and expectations are that 
    royalty revenues will be earned in excess of advances received during 2005.

3.  Prospects

The Directors continue to remain confident about the prospects of the
businesses.  ZDP has grown from an annual turnover of approximately £1.9 million
in 2002 to approximately £5.1 million in 2003.  Turnover for the fifteen months
to 31st March 2005 is expected to be over £11.0 million.

The interactive DVD Games sector is expanding rapidly and the Directors believe
that ZDP is in an excellent position to take advantage of this growth and expand
its products into the lucrative North American market.

Following the launch of the first version of DVD-EXTRA STUDIO in April 2004,
ZOOtech is seeing an increasing number of DVD titles being produced using the
technology.  The product is now being used in organisations in France, Germany,
Benelux, UK, Australia and in North America to produce interactive DVDs.

Products are also being produced and published in all of ZOOtech's targeted
sectors and, importantly, revenues continue to grow across the various sectors
including Entertainment and Multimedia, Corporate and Marketing, Education and
Early Learning, and also in the Process Improvement area for DVD Production.
Releasing version 1.6 as planned in April 2005 with significant enhancements to
functionality was a major milestone.  The Directors see the development of the
new high definition formats as a commercial opportunity and ZOOtech is working
alongside the developers of both potential future disc formats.

Extraordinary General Meeting

On pages 9 to 11 of this document is a notice convening the EGM of the Company
to be held at the Company's offices at 20 Furnival Street, Sheffield, S1 4QT at
11.00am on 21 June 2005, at which the resolutions set out in such notice (the '
Resolutions') will be proposed.

Recommendation

The Directors consider the Placing and the approval of the Resolutions,
including the Placing Resolution upon which the Placing is conditional, to be in
the best interests of the Company and its shareholders as a whole.



The Directors unanimously recommend shareholders to vote in favour of the
Resolutions, as they have irrevocably undertaken to do or procure to be done in
respect of their own beneficial holdings of ordinary shares amount to, in
aggregate, 79,123,863 ordinary shares, representing approximately 28.3 per cent.
of the current issued share capital of the Company.



                                    - ends -




                      This information is provided by RNS
            The company news service from the London Stock Exchange